The German economy shrank slightly in 2023, official data showed Monday, as costly energy, high interest rates and cooling foreign demand took their toll on Europe's export giant.
Publish dateTuesday 16 January 2024 - 13:57
Story Code : 284327
Afghan Voice Agency (AVA) - Monitoring: Output contracted by 0.3 percent year-on-year, federal statistics agency Destatis said in preliminary figures, AFP reported.
"Overall economic development faltered in Germany in 2023 in an environment that continues to be marked by multiple crises", the agency's Ruth Brand told a Berlin press conference.
Europe's largest economy likely saw a 0.3-percent drop in gross domestic output in the final quarter of the year, the agency calculated, again in preliminary figures.
It also revised the figure for the third quarter from a 0.1-percent contraction to a stagnation, meaning Germany avoided a technical recession of two successive quarters of negative growth.
The German economy has faced severe headwinds since Russia's war in Ukraine sent inflation, particularly the cost of energy, soaring.
The price spikes contributed to a steep downturn in the energy-hungry manufacturing sector, while weaker demand from key trading partner China and aggressive eurozone rate hikes to tame inflation further added to Germany's woes.
The limp economic performance was widely expected, with the International Monetary Fund predicting that Germany would be the only major advanced economy not to grow in 2023.
If confirmed in the final figures, the 2023 contraction makes it Germany's weakest year since the economy shrank by 4.9 percent in 2020 as a result of the coronavirus pandemic.
A modest recovery is expected to get under way in 2024, with Germany's Bundesbank central bank recently forecasting growth of 0.4 percent.
"We see a silver lining for the economy in 2024," said KfW Chief Economist Fritzi Koehler-Geib.
"Thanks to strong real wage growth, private consumption in particular is likely to pick up again. Together with an expected recovery in export demand, gross domestic product is likely to grow," she added.
"Inflation is expected to return to an annual average of around two percent. This means that the landing after the period of high inflation will probably be quite soft in Germany too," she added./Fars News
"Overall economic development faltered in Germany in 2023 in an environment that continues to be marked by multiple crises", the agency's Ruth Brand told a Berlin press conference.
Europe's largest economy likely saw a 0.3-percent drop in gross domestic output in the final quarter of the year, the agency calculated, again in preliminary figures.
It also revised the figure for the third quarter from a 0.1-percent contraction to a stagnation, meaning Germany avoided a technical recession of two successive quarters of negative growth.
The German economy has faced severe headwinds since Russia's war in Ukraine sent inflation, particularly the cost of energy, soaring.
The price spikes contributed to a steep downturn in the energy-hungry manufacturing sector, while weaker demand from key trading partner China and aggressive eurozone rate hikes to tame inflation further added to Germany's woes.
The limp economic performance was widely expected, with the International Monetary Fund predicting that Germany would be the only major advanced economy not to grow in 2023.
If confirmed in the final figures, the 2023 contraction makes it Germany's weakest year since the economy shrank by 4.9 percent in 2020 as a result of the coronavirus pandemic.
A modest recovery is expected to get under way in 2024, with Germany's Bundesbank central bank recently forecasting growth of 0.4 percent.
"We see a silver lining for the economy in 2024," said KfW Chief Economist Fritzi Koehler-Geib.
"Thanks to strong real wage growth, private consumption in particular is likely to pick up again. Together with an expected recovery in export demand, gross domestic product is likely to grow," she added.
"Inflation is expected to return to an annual average of around two percent. This means that the landing after the period of high inflation will probably be quite soft in Germany too," she added./Fars News
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